Self-regulation is an implicit but important tenet of liberal democratic capitalism. Sure, there are rules and constraints but more to define the framework of economic and political competition than to direct individual behaviour.  The underlying belief is that regulation should be applied lightly and that it should not circumscribe man’s ‘animal spirits’.   Common sense is an intrinsic attribute of human nature and the collective outcome of individual ‘sense’ will ultimately lead to the ‘common’ good.  

This belief has been resoundingly upended in recent months. I am writing this piece from my hotel room in London. Two issues dominate the UK newspapers. The first is of course the financial crisis; the second the shenanigans of the British MPs. Both have had the effect of undermining people’s faith in the ‘soft power’ of self-regulation.

With hindsight it is clear that it was wrong, indeed perhaps delusional to expect bankers to arrest the momentum of their ‘irrational exuberance’. The belief that the market would self-regulate and that rational and clever people would recognise and then preempt the onset of unsustainable ‘bubbles’ did not clearly take into account the power of greed and complacency and the individual and collective stupidity that this generates.

Equally the case with the British Parliamentarians. The people’s trust in the integrity of their representatives to steer clear of the line that divides the bending of rules from the breaking of them was misplaced. Every day, drip-by-drip, the newspapers reveal the names of those in Parliament that have misused their allowances. The amounts involved are by any standards of corruption (if indeed corruption should be quantitatively compared) trivial.  The reasons for the transgressions are however uniquely British. One MP for instance claimed Rs. 20 lakhs towards the reimbursement of the shrubbery he had planted to protect his trees from pestilence; another claimed Rs. 2 lakhs for the cost of building an island duck house to protect his ducks from marauding foxes; a third an undisclosed sum to rebuild the moat around his country home etc.  Many of course did what so many other non-Britishers do. They exaggerated their petrol bills, housing allowances and other petty expenses. The public taxpayer is furious and heads have started to roll. The speaker of the House of Common has been compelled to resign — the first time in 200 years; several MPs have been heckled into political retirement and there is talk of reducing the number of MPs in Parliament (currently there are over 650 in the House of Commons as against our 543 in the Lok Sabha) and constitutionalists and political theorists have reopened the debate on whether Britain should codify its rules of governance in a written constitution.

... contd.